11) Under the periodic inventory system, which of the following entries is prepared at the end of the accounting period?
A) debit Purchases and credit Cost of Goods Sold
B) debit Cost of Goods Sold and credit Inventory
C) debit Cost of Goods Sold and credit Purchases
D) B and C
12) Jolly Rancher Company uses the periodic inventory system.
Required:
Prepare the journal entries to record the following transactions. Omit explanations.
1. Purchased $500,000 of inventory on account.
2. Sales on account were $840,000.
3. Closed out beginning inventory of $110,000.
4. The ending inventory based on a physical count was $117,000.
5. Closed out purchases account.
6.8 Learning Objective 6-B
1) The Internal Revenue Service allows companies to use LIFO for income tax purposes even if they use FIFO for financial reporting.
2) The LIFO Reserve is the difference between the LIFO cost of inventory and what the cost of that inventory
would be under FIFO.
3) The income tax saved by using LIFO instead of FIFO is equal to the ________ times the income tax rate.
A) cost of the ending inventory
B) retail price of the ending inventory
C) cost of the beginning inventory
D) LIFO Reserve
4) The LIFO Reserve can increase only when:
A) inventory costs are stable.
B) inventory costs are falling.
C) inventory costs are rising.
D) the foreign exchange rate is rising.